Low pay, no bonus: U.S. retailers struggle with hiring

Pedestrians pass a sign advertising a sale and a job opening at a shop on Newbury Street in Boston, Mass., Oct. 11. REUTERS/Brian Snyder

(Reuters) — U.S. retailers are finding it increasingly difficult to hire employees for stores and for middle and higher management as low pay and a feeling of uncertainty clouds the industry following a spate of bankruptcies and store closures.

Retailers including Macy's and J.C. Penney have said they will hire the same or fewer seasonal workers for the holidays this year than last, while some, like Walmart, have chosen not to hire temporary workers at all.

Sector observers have attributed this to brick-and-mortar retailers' retreat under pressure from online players including Amazon, and firms themselves say they have simply taken a staggered approach to hiring this year that fills gaps slowly. Macy's said holiday hiring was "off to a great start".

But staffing companies that hire employees for the industry say the problem is deeper and is putting pressure both on the quality of staff retailers can hire and, sooner or later, wages that potential candidates will demand.

The staffing firms say it may also create a squeeze on retailers as they seek to hire heavily for Halloween, Thanksgiving and Christmas — the biggest drivers of retailers' annual profits.

"Where we have a problem hiring is the lower level, the seasonal or entry-level employees," said Melissa Hassett, vice-president of client delivery for ManpowerGroup Solutions.

Her clients include Lowe's, Staples and auto parts firm Pep Boys and she says employees are seeking more flexibility with their schedules, training and pay, which is competitive with other entry-level jobs.

U.S. unemployment levels have hit their lowest in more than 16 years and recruiters say the rise of the "gig economy" and new occupations, such as driving for Uber or Deliveroo, is shrinking the youth talent pool.

The hourly mean wage for entry level sales personnel at retailers, including at clothing, sports goods and department stores, was $11.96 as of May 2016, according to the latest data from the Bureau of Labor Statistics.

In comparison, an Uber driver earns $14.76 per hour, according to data Glassdoor posted on its site earlier this month.

The job search and review site listed 829,500 retail job openings as of mid-October, compared with 875,000 at the same time a year ago.

"There just aren't enough people who are looking for work ... to be put in those positions," the site's chief economist, Andrew Chamberlain, said.

NO BONUS

The Bureau of Labor Statistics' JOLTS survey on job openings also shows that more people have quit retail by August this year than in the past decade, with 3.74 million giving up their jobs.

Recruiters say that reflects the growing stresses of working for companies who have cut costs, closed stores and asked staff to adapt and do more.

"The jobs have become bigger," Manpower Group's Hassett said. "A manager will do more at the stores, they'll even pick up and join a register, help stocking if they need to."

Walmart said that it has not hired for the holiday-season in part because they are paying existing employees more.

"We think it just makes sense to partner with the associates who know the business, are trained in serving customers and the operations of the stores, and who know the customer better than anyone," said Erica Jones, Walmart's senior manager of corporate communications.

J.C. Penney said it was introducing paid time off for part-time hourly associates, starting from early 2018, to entice seasonal hires to stay beyond the holiday season.

Higher up the food chain, recruiters also point to bonuses that have lagged other industries as harming efforts to draw in and keep talented regional managers or heads of business lines.

An analysis by Korn Ferry of 40 big North American retailers showed that 73 per cent paid little to no bonuses to senior executives for their performance in 2016. Thirty five per cent paid no bonus, up from 25 per cent last year.

"It's the perception of where retail as an industry is going," Manpower's Hassett said. "So when the brick-and-mortar retail is really struggling, at that executive level, people are concerned about staying in retail."